Construction spending in the United States unexpectedly rebounded in November, driven by increases in non-residential structures, due to rising mortgage rates.
The Commerce Department said Tuesday that construction spending rose 0.2% in November, after falling 0.2% in October. Economists polled by Reuters had forecast construction spending to fall 0.4 percent.
The November data revealed that construction spending increased 8.5% annually.
Spending on private construction projects advanced 0.3% after falling 0.7% in October. Investment in private non-residential structures, such as oil and gas well drilling, increased 1.7 percent.
But residential construction spending fell 0.5%, with single-family home projects down 2.9%. Spending on multi-family housing projects increased 2.4%, benefiting from strong demand for rental housing.
Fed and mortgages
The Federal Reserve’s (Fed) attempt to control inflation with the fastest interest rate hike cycle since the 1980s is strangling the housing market, with home construction and sales plummeting.
The median rate on 30-year fixed mortgages, which topped 7% in October for the first time since 2002, has resumed its upward trend after briefly reversing in late 2022, according to data from mortgage finance agency Freddie Mac.
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